US stocks open lower
US stocks opened lower on Thursday after the Federal Reserve secured another interest rate hike and dashed hopes of a reversal to a softer tightening stance.
The Dow Jones Industrial Average was 0.9 percent lower in early trade, while the S&P 500 was down 1.2 percent. The Nasdaq Composite also traded down 1.4%.
— Karen Gilchrist
Bank of England raises its benchmark interest rate by 75 basis points, its biggest increase in 33 years
Buses pass in the financial district of the City of London outside the Royal Exchange near the Bank of England on July 2, 2021 in London, United Kingdom.
Mike Kemp | In photos | Getty Images
The Bank of England raised interest rates by 75 basis points on Thursday, its biggest single hike since 1989, but struck a dour tone as policymakers sought to temper market expectations of further aggressive monetary tightening .
The 75-basis-point increase raises the bank’s interest rate to 3%, its eighth consecutive increase in the main lending rate, after the Monetary Policy Committee voted 7-2 in favor. One member voted for an increase of 0.5 percentage points, while one favored an increase of 0.25.
“The majority of the committee considers that if the economy develops broadly in line with the latest Monetary Policy Report forecasts, further increases in the Bank Rate may be necessary to bring inflation back to target on a sustained basis, albeit to a peak, lower than priced in financial markets,” the MPC said, offering unusually specific guidance for the market.
Read the full story here.
– Elliott Smith
The ECB’s Centeno says most of the rate hikes have already been done
European Central Bank policymaker Mario Centeno told Portuguese newspaper Publico on Thursday that much of the interest rate hikes in the eurozone have already been done.
The ECB has raised interest rates by a total of 200 basis points in its last three monetary policy meetings as it seeks to rein in record high inflation, which is expected to peak in the fourth quarter.
– Elliott Smith
Stocks on the move: Netcompany up 16%, RS Group down 10%
Netcompany shares jumped more than 16% in early trade to top the Stoxx 600 after the Danish IT consultancy reported strong third-quarter earnings.
At the bottom of Europe’s blue-chip index, shares in British industrial distributor RS Group fell 10% after the company’s half-year report and the announcement that its chief executive will take a leave of absence.
The crisis is over for the British pound, but analysts see further weakening
The British pound is on a firmer footing following the appointment of new prime minister Rishi Sunak, but Wall Street still sees further vulnerability over the next 12 months.
In a note on Monday, Deutsche Bank vice president and currency strategist Shreyas Gopal said the “crisis” chapter for the UK could now be closed, with the pound now likely to trade as a “normal” currency, but noted that downward pressure from the big external financing needs and real interest rates remain low.
Read the full story here.
– Elliott Smith
Refinitiv data shows 2-year US Treasury yield briefly above 5.1%
Refinitiv data showed the yield on 2-year US Treasuries briefly topped 5.1% in the afternoon session in Asia. It was last at 4.6804%.
The reason for the jump was not immediately clear.
The yield on the 10-year Treasury rose after hours in the US after Fed Chairman Jerome Powell said the final rate will still be higher than expected – and was last at 4.1448%.
The 30-year Treasury yield was also higher at 4.1908%.
Yields move inversely with prices and 1 basis point equals 0.01%.
– Jihe Lee
Investors should remain cautious on unverified China reopening notes: Credit Suisse
Investors should “remain wary” of unverified notes circulating on social media hinting at a potential reopening of China early next year, a strategist at Credit Suisse said.
“I think judging from different angles with a lot of news flows — especially the unverified ones, we have to remain cautious,” said Edmond Huang, head of China equities research at Credit Suisse.
Speaking at the firm’s China Investment Conference, Huang said it was more likely to be a measured reopening process than a sudden one.
“It will take some time, especially after the party congress and the formation of the new government – which means it will be a more gradual process than overnight, with China fully opening up to the rest of the world,” he said.
— Jihe Lee
JPMorgan Asset Management sees less Fed hike in December
JPMorgan Asset Management expects the Federal Reserve to raise rates by a smaller 50 basis points in December, according to a note.
Asia-Pacific chief market strategist Tai Hui said the Fed could take a more dovish path in the near term.
“If core inflation does come down between now and the end of the year, the Fed could choose a more dovish rate and avoid putting the economy into recession,” he said in the note.
“We do think there is some slowdown in inflation on the horizon,” he said, adding that the Fed’s tightening cycle is expected to continue into the second quarter of 2023.
– Jihe Lee
CNBC Pro: Wall Street cuts price targets this earnings season. Here are 13 US stocks that bucked the trend
Only a handful of companies have avoided a cut in their stock price targets from Wall Street banks this earnings season, a CNBC Pro analysis found.
Of the nearly 300 companies in the S&P 500 that reported results in the past month, more than two-thirds — 72 percent — saw their average price targets cut or left unchanged by analysts from a month ago.
Only 13 stocks emerged with significantly higher price targets of 5% or more and still offer potential upside of at least 5%.
CNBC Pro subscribers can read more here.
– Ganesh Rao
Stocks fall as Powell says final interest rate will be higher than previously expected
In a briefing with reporters on Wednesday after the fourth consecutive rate hike of 0.75 percentage points, Federal Reserve Chairman Jerome Powell said the central bank’s ultimate target for raising interest rates had risen.
“We still have some way to go and inputs since our last meeting suggest that the final level of interest rates will be higher than previously expected,” he said.
Stocks fell after the comment, signaling that interest rates will continue to rise and are likely to remain higher than expected for longer as the Fed tames inflation. That reversed gains from earlier in the afternoon, when traders took the Fed statement as more dovish and hoped that rate hikes would be smaller going forward.
The Dow Jones Industrial Average rose about 60 points but pared gains. The S&P 500 also pared its post-rate hike surge, rising just 0.09%. The Nasdaq was slightly in the red.
— Carmen Reinicke
Wednesday, November 2, 2022, 12:45 PM EDT
European markets: Here are the opening invitations
European markets are expecting a positive start to trading on Wednesday as investors brace for the latest monetary policy decision from the US Federal Reserve.
Many analysts expect the meeting to lead to an interest rate hike of 75 basis points. Investors will also be watching the central bank’s statement and Fed Chairman Jerome Powell’s press conference for signs of a slowdown in the pace of tightening.
London’s FTSE is expected to open 21 points higher at 7,115, Germany’s DAX up 84 points to 13,422, France’s CAC up 36 points to 6,364 and Italy’s FTSE MIB up 119 points to 22,771, according to IG data.
Profits will come from Next, Aston Martin Lagonda, GSK, Metro and Maersk. German unemployment data for October will also be published.
— Holly Elite
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